A representative group of small businesses has reiterated its concerns about SME liquidity this year, despite the Government introducing a package of support measures in recent weeks.
He Small Business Association (SFA), an arm of the Ibec pressure group, said one in three small businesses could run out of cash within six months without additional funding.
David Broderick, director of the SFA, said his organization is aware that a number of SMEs are experiencing rising costs, which “highlights the clear and present threat to the viability of small businesses, which are the lifeblood of communities across the world.” country”.
Broderick said some small businesses continue to have liquidity problems, but a series of measures implemented in recent months can curb the level of bankruptcies among struggling businesses.
“One in five small businesses have raised funding from friends and family to cope with rising costs. “This is an alarming reality,” Broderick said.
The SFA investigation, which included almost 500 interviews, was carried out in the weeks before the government increased support amid lobby pressure.
The research found that average business costs have increased by 16.6%, while the majority of SMEs surveyed said wages have contributed to rising costs, amid persistent inflation squeezing some households.
Companies participating in the SFA research called for initiatives to improve participation and uptake of training and upskilling programs, as well as improving communication of financial supports. Participants also ask for compensation to cover training costs.
Earlier this month, the Government agreed to a series of Measures to continue helping small and medium-sized businesses.following reports from professional services firms Deloitte and PwC that showed the number of insolvencies this year is rapidly returning to pre-pandemic levels, suggesting otherwise viable businesses are struggling to continue operations in the current environment.
Insolvency levels They have not yet surpassed the maximum reached in 2012 after the banking crisis.
The measures, introduced by the Department for Enterprise, Trade and Employment, include doubling the Innovation Grants Scheme to €10,000, increasing the maximum amount available under the Energy Efficiency Grants Scheme to €10,000 and reducing the rate business contribution from 50% to 25%.
It is possible that the Government has given in to pressure from lobby groups, since just a week before the new measures were announced, a representative of the Department of Enterprise said that it does not foresee a “tsunami” of companies seeking to be rescued through a restructuring plan this year.
Fiona O’Dea, director of the Department for Enterprise, Trade and Employment, said that while insolvency levels have increased recently, they remain below pre-pandemic figures.
Meanwhile, there are concerns that expanded measures such as the subsidy to increase the cost of doing business could lead to a rise in so-called “zombie” companies, many of which received a lifeline with COVID-19 business supports that have since have been dissolved. .